Flunking the Test

Let's be clear about what's going on with the city's "tuition tax" debate. Yes, students are being used as pawns, because city officials can't tax universities and other large non-profits directly. But Mayor Luke Ravenstahl didn't invent the game. He's not even winning it.

The story so far: In November, Ravenstahl proposed the tax -- a 1 percent fee on tuition at local colleges and trade schools -- to shore up the city's chronically strapped pension fund. Students are upset, understandably. The average student graduates college owing more than $20,000 in loans: She doesn't want to be saddled with someone else's debts too. As University of Pittsburgh student Jacob Brown told City Council Nov. 30, "It's immoral to tax our future to pay for our past."

The schools themselves, meanwhile, have launched an advertising campaign decrying the tax. Pitt, for example, has been taking out quarter-page newspaper ads identifying students who already pay sales and other taxes. "Another tax on students is an unfair-share tax," the ad insists.

More interesting, though, is a development that isn't being advertised.

At the same time Pitt is trying to keep government's hands out of student pockets, the school is reaching for everyone else's wallet. As the University Times reported in mid-November, Pitt is asking the state for nearly $195 million dollars next year -- a 5 percent increase over the year before. More than $170 million of that will go to general education costs; another $449,000 will fund "student life initiatives."

Pitt makes such a request every year, and I hope they get the money -- partly because I think investing in education pays off for everyone, and partly because my wife works at Pitt. (She also takes classes there, so a tuition tax would hit us as well.)

But this year's request comes with a couple ironies attached.

First, Pitt's request acknowledges that, even if the state grants its full request, tuition will likely increase by 4 percent next year. That would cost most undergrads an extra $533 over what they currently pay -- nearly four times what Ravenstahl's tax would cost next year.

And that's the best-case scenario. What if state officials decline to give Pitt more money, or ask it to take less? Pitt could raise tuition even higher, or cut student services. In that case, the politicians who'd really be hurting Oakland students could be state legislators, not the mayor. But somehow, I don't expect students to drive out to Harrisburg, or Pitt to buy newspaper ads calling out state legislators.

Maybe they should, since Pennsylvania actually contributes a relatively paltry amount to its universities. That's one reason tuitions are so high: A 2005 Pennsylvania Economy League study showed that only two states had public universities with higher tuition costs. But never mind that: Harrisburg has a new whipping-boy. Suddenly it's Luke Ravenstahl who's driving up the cost of education!

Ravenstahl partly has himself to blame for becoming the goat. When he first announced the proposal, he called it the "Fair Share tax," and told Pittsburghers that when students got rowdy, the person paying to clean up the mess was "Larry from Lawrenceville."

It was a divisive approach, playing Old Pittsburgh off against New Pittsburgh, cranky oldsters versus young students. The result? Students now sound like cranky oldsters, denouncing any tax whose benefit is not immediately apparent to them. (Tuition hikes bother students less even if they cost more, Carnegie Mellon University student Aaron Gross told CP's Chris Young, because "Students see the benefit of [tuition hikes] every day.") Meanwhile, city retirees could fairly ask why, after their tax dollars supported Pitt for years, students reject paying retiree "life initiatives," like buying groceries.

The truth is that both sides have a lot in common, including the fact that they're missing the real issue. The city's economic engines, its biggest employers, are non-profits who pay less in local taxes than much smaller businesses. That is unfair, and it beggars everyone.

Because as Pitt's ads point out, students already pay taxes. Some have families here. So if the city doesn't tax tuition, students will pay the price some other way -- either in higher taxes or reduced services. The pension debt isn't going disappear.

This ought to be the moment where we all take a long look at the role non-profits play as special interests: seeking government subsidies where they can, fighting taxes where they must. Instead, we are all getting played.